Saturday, January 26, 2008

It is even more fun to read someone else's comments on your essays, when it is clear (as here) that the reader understands it even better than I did.

In fact, let me reproduce Tim's last paragraph, because it is better than anything I said:

There's a balancing act: too little outsourcing and a firm becomes a socialist state, denied incentives or price signals; too much and the problem of coordinating all the contracts becomes impossible.It's worth thinking about how changing technology may alter this balancing act. The answer is not obvious. Some outsourcing decisions are made much easier to coordinate thanks to the internet and all the rest. At the same time, inter-firm communications also improve. And if the world is full of firms making more complex, intangible products, that may favour more implicit contracts and therefore larger firms. I simply don't know the answer and I'm not sure anyone else does either.

Yep, yep, yepper. No one knows, no way to know. But firms that figure it out make money, and get bigger.

Governments could never solve this problem, because (1) no price info, at any level, to make judgments ex ante, and (2) no profit feedback, to let you know if got it right, ex post.

Is optimal firm size increasing, decreasing, or staying about the same? I'll be able to tell the answer for 2008...in about 2010!

UPDATE: A reader notes I had botched the second link above. Fixed, now. Thanks!

"I recently interviewed an asylum seeker from Cameroon who was living in Potsdam, just west of Berlin. He said he was so used to people calling him "n****r" or making ape sounds at him that he no longer paid attention. The thing that really got to him, though, was being followed around shops or the local library by staff expecting him to steal something. Or seeing how guests in a cafe would remove their clothing from the coat stand he had just put his jacket on."

As for the title of this post, well feast your eyes people and don't forget to tip your server!

Lenny Sapozhnikov, AFL-CIO deputy state director for Pennsylvania, recently talked with Michael Munger, president of United Steelworkers (USW) Local 1660, which represents workers at the Wheatland Tube Co., in Wheatland, Pa. Munger recently was elected vice president of the Mercer County Central Labor Council, and last week, he led a rally outside the office of Rep. Phil English (R) as part of the USW’s Protect Our Kids—Stop Toxic Imports campaign.

Q: You just wrapped up the Toxic Trade Day of Action on Jan. 16. Tell us more about the goals of this campaign and your own involvement.

Munger: The goal of the campaign is getting tougher trade laws and more stringent safety tests for imports coming into the country. We all heard about the unsafe products coming into the country. Kids are having contact with toxic chemicals in those products and getting sick. We have good safety measures in this country but no one is testing the imports. We want tougher trade laws enacted.

Mike, Mike, Mike: All we need to do is make final retailers responsible for the safety of the products, and open them to private lawsuits if the products they sell are toxic or dangerous. Common law doctrine of "last best chance," in a statute.

We don't want bureaucrats at the borders opening up container boxes, breaking pallets, opening shrink wrap, opening cardboard boxes, and then opening the plastic wrappers that protect toys. That will never work.

Just make the retailer responsible, privately, for products they sell. And the problem will be solved.

The "problem," in fact, is that we rely on the state in the first place. This is an easy problem to solve.

"The recent roughing-up of Barack Obama was in the trademark style of the Clinton years in the White House. High-minded and self-important on the surface, smarmily duplicitous underneath, meanwhile jabbing hard to the groin area. They are a slippery pair and come as a package. The nation is at fair risk of getting them back in the White House for four more years. The thought makes me queasy."

The last two Mexican Presidents (i.e. the first two truly democratically elected ones) have had trouble advancing their policies because the old ruling party, the PRI, retains a large bloc of seats in the legislature and is their cooperation is crucial for the President's party (the PAN) to pass laws. This stalemate has so far blocked any sort of opening of Mexico's oil industry to foreign investment, despite the fact that PEMEX's reserves are falling and the domestic industry badly needs new investment.

However, over the last week, the PRI is signalling a willingness to allow some limited foreign investment in new explorations and to negotiate over further opening the energy sector. This is potentially a big victory for President Calderon as energy reform was/is one of his key issues. I wasn't wild about the fiscal reform "victory" he recently achieved, but this one looks promising.

Here is a Bloomberg story and here is a more recent piece from Reuters.

Sugar has enjoyed a massively protected status in the USA since 1937 (with the exception of a couple years in the mid 1970s). Tariffs, Quotas, Price Supports, Loans, and Restrictions on Domestic Production have all kept the US price of sugar well above the world price (I don't have exact numbers but I'm pretty sure it has generally been over double the world price). Here is a summary of US sugar policy over time.

Now Sugar has finally met NAFTA and it looks like Sugar will continue its winning streak.

NAFTA had a lot of its provisions phased in, with the more controversial ones pushed back. In the case of sugar, it was 15 years, i.e. now.

As of January 1, Mexican (and Canadian!!) sugar can freely enter the US market. However, the government is still committed to controlling the price of sugar! The new idea is that the Feds will buy up the Mexican exports and (wait for it, 'cause it's freakin' awesome) convert it to ethanol.

That's right folks, it's a perfect storm of stupidity that could get pretty expensive.

"Even sugar growers can see the fuss this might create unless Mexican exports are restrained. So they are now circulating still another set of recommendations in Congress that would explicitly control the amount of sugar Mexico is allowed to ship to the U.S., and vice-versa. No new competition would enter either market. To supervise this cartel, the sugar lobby wants Congress to establish a new binational commission. The proposal would also ban the re-exporting of foods (notably candy) that use sugar imported from a third country, and would sharply limit how much sugar could come from third countries. In other words, sugar would be renegotiated right out of Nafta only weeks after it finally took effect."

The articles concludes as follows:

"So Congress and the Bush Administration have to choose: Either defend the economic benefits from an integrated North American market, or bow to one of the world's richest and most destructive special interests."

Anyone wanna bet on the outcome? My money's on the "destructive special interests".

some highlights:"The sell-off was evenly distributed from East to West, with indexes plunging in London, Paris, Frankfurt, Tokyo, Hong Kong, Seoul and Bombay. The Frankfurt Stock Exchange’s Dax index plummeted 7.2 percent, its steepest one-day decline since Sept. 11, 2001. The 7.4 percent drop in Bombay’s Sensex index was the second-worst single-day tumble in its history.

Stocks followed suit when markets opened in the Western Hemisphere. Canadian stocks closed down 4.75 percent, and a key market index in Brazil was off 6.6 percent.

In Japan, which may be facing a new recession of its own, most indexes were off by more than 3 percent on Monday and were down another 4 percent in early trading on Tuesday.

Those jitters extended to fast-growing markets, like China, and those, like India, that are thought to be relatively insulated from the United States. Shanghai’s Composite Index closed down 5.1 percent, while Hong Kong’s Hang Seng fell 5.5 percent, also the most since Sept. 11, 2001."

Some thoughts:

(1) there goes the REST of my portfolio

(2) so much for de-coupling

(3) will the ECB be able to stick to their "no rate cuts" policy? will we get a natural experiment between accomodation (Bernanke) and toughness (Trichet)?

What's that you say? Honduras is in CAFTA? Surely we can't unilaterally stop exports from a country with which we have a free trade agreement? Of course we can! The deal allows us to put tariffs on apparel items (I believe at the pre-CAFTA levels) "temporarily" if the domestic industry is harmed or threatened. We just have to give them 60 days notice and then announce our final decision.

Supposedly this is all because of one Congressman, Robby Aderholt, who represents Ft. Payne Alabama the erstwhile (and future??) sock capital of the world. He was the swing vote on CAFTA and his price was sock protectionism.

"Why in the world would President Bush go along with reinstating the tariff?

(Ed: Because he's a spineless moron?)

There's only one reason: a deal President Bush struck late one night in July 2005.

The Deal

That July night, Bush met with Fort Payne's congressman, Robert Aderholt, to talk about tariffs and the sock business.

That meeting was, most likely, the moment Aderholt had more power than at any other time in his life. The House was voting on CAFTA, the Central America Free Trade Agreement. The vote was an exact tie. Aderholt was the holdout. And President Bush very much wanted CAFTA to pass. So, Aderholt offered the president a deal: He could get his big free-trade deal only if he rolled back free trade on one industry, the sock industry.

"I told him this was what I needed," Aderholt said. "This was the one thing I had great concerns about."

That night, President Bush agreed to Aderholt's deal. CAFTA passed. And the White House gave itself a self-imposed deadline of Dec.19, 2007, to put back tariffs on sock exports from Honduras.

There is a further bizarre twist to this story. According to NPR, Ft. Payne isn't really hurting from the decline of the local sockmakers:

"Jimmy Durham, the county economic development officer, shows just how grim things have been for the sock business here.

On street after street, he points to buildings that used to house sock mills, most of which are now gone. With all these businesses shuttered, you might think Durham is in despair about the future of Fort Payne. He isn't.

Those closed sock factories are reopening as new businesses.

He points to Steadfast, which makes bridges; Ferguson, a major plumbing supply company; a distribution center for Children's Place; two new metal tube manufacturers; a high-tech label maker. For a town of only 13,000 people, this is a lot of new, good-paying employment. These jobs pay more than sock-making jobs.

In fact, most of 4,000 recently laid-off sock workers quickly found new jobs. It's an irony that reversing this tariff — fought for so hard by some in Fort Payne — will likely have its biggest impact thousands of miles away in Honduras."

Ya, but the bridgemaker and the plumber and the label maker aren't going to be beholden to Rep. Aderholt, now are they? And them damn Hondurans sure aren't going to put money in his coffers either.

So here it is people, in order to save free trade, Shrub was forced to destroy it.

Bonus fun fact: Speaking of Vietnam, did you know that William Westmoreland was the son of a textile manufacturer?

Mrs. Angus and I weekended in Dallas. Caught a Mavs game and saw a few movies. Against my inclination, but on the strength of its Golden Globe for best picture, one of them was "Atonement".

Holy Crap people. What a stinker! I was going all mystery science theatre on it, embarrassing Mrs. Angus. Let me be specific. The plot makes no sense, driven as it is by a string of impossibly unlikely coincidences and everything is melodramatically signaled well in advance of it's actual occurrence. Apparently torn between a happy or sad ending the filmmakers delivered both!! The movie is best viewed as a Monty Python-esque send up of British people. Everyone is a cliche. The foppish rich lads, the genius and perfect servant's son, the evil little girl, the hospital matron, the cockney soldier.

The half hearted attempts to show the horrors of war are basically laugh out loud funny for their surrealistic pomposity. No one seems real and there is nothing that makes you care or emotionally invest in any outcome, whether it be happy or sad.

And, it is worth reading the comments on the YouTube entries. Somefolks take themselves VERY seriously. Check this exchange:

These commercials tickle me. Especially the white guy who try to act black using the latest rap slogan. But based on the nature of the commercials I know these locations are in run down neighborhoods. Not a place to be with refund money JimmyShoe5 (2 weeks ago) Show Hide Marked as spam 0 Reply | Spam

I like these dudes swagga! I dont think some of y'all white folks understand black humor! This is great work...SUPPORT BLACK BUSINESS!!! MOCHAFETISH1 (2 weeks ago) Show Hide Marked as spam 0 Reply | Spam

I just get the impression to sigh and say *ugh everytime I see these commercials. I've seen these commercials a lot since I've been in college (and the 1st time I saw it, I thought my eyes... and ears were playing games). I was a little shocked that something like this was a commercial.

This place has been doing business since 1995, so either something is being done right or there isnt anywhere else to go. Whatever the case, lately the majority of tv is going down hill! michbearhunter (2 weeks ago) Show Hide Marked as spam +1 Reply | Spam

This s**t is airing around Detroit too. I'z gonna run right out and gets my taxes did by a bunch of gangstas. Yeah right! Defender4all (2 weeks ago) Show Hide Marked as spam -2 Reply | Spam

AMERICA !!Welcome to Memphis.When Obama gets to be our next president there will be a MoMoney taxes on one side and a hot wings shack on the other side on every corner in this great nation.Thats the big change Obama keeps talking about.Oh gee whiz ,I can't wait. JimmyShoe5 (2 weeks ago) Show Hide Marked as spam +1 Reply | Spam

This is a dumb comment. Must be a fan of Lil' Bush, the dumbest man on earth!!! aloha0099 (3 weeks ago) Show Hide Marked as spam 0 Reply | Spam

10 year anniversery?! When was this commercial aired? how old is mo money taxes??? MOCHAFETISH1 (2 weeks ago) Show Hide Marked as spam 0 Reply | Spam

It has now been about ten days since I arrived, and I have completed a full week of classes (out of 14). I was picked up at the airport by XX, whom I knew from YY. He brought me to my luxury apartment on the 14th floor of West Bay Towers, which overlooks a marina and the Bay. The apartment, which is supplied for me by ZZU, is bigger than the first house we owned. It was fully stocked with food and supplies. It has a washer/dryer, ironing board and iron. I still haven’t had to buy groceries, but will do so today.

(ED: YEAH, BUT DID YOU IRON?)

Campus (Education City) is on the outskirts of Doha, about 8 miles due west of the Bay. I caught rides to work from people who live in the Towers, until my rental car became available – the day before the first day of my classes, Monday January 14. I left early for campus that day, but there was a detour that threw me off, and I got so hopelessly lost that they had to come and get me. It was a little embarrassing because I pride myself on having a pretty good sense of direction, but I wound up due north instead of due west. It made me glad (just that one time) that they insist I carry a cell phone, which ZZU also pays for.

(ED: IRONIC, SINCE NEANDERBILL RIDES WITH ME, AND "BORROWS" MY CELL PHONE, IN NC. WHO KNEW HE WAS SELF-SUFFICIENT, ALL OF A SUDDEN?)

Why couldn’t I check the sun for directions? Because it did not appear for nearly a week. I was expecting weather that varied between warm and hot, but it has been cold and rainy. Not as cold as YY or even Raleigh, but colder than I expected (lowest since I got here was 46 F at night). The apartment has no heat, for all its luxurious appointments.

(ED: 46 AND NO HEAT IS, AS WE SAY IN MEMORY OF JOHN JAROSZ, A "MITE NIP.")

What does the city look like? Well I’ll show you when I get a camera. (My old one died, and they laughed at Best Buy when I tried to replace the 64 MB cartridge.)

(ED: YAY, NEANDERBILL! HOLDING BACK PROGRESS WORLDWIDE FOR MORE THAN 70 YEARS!)

There is construction all over the place. The architecture is mostly modern, often interesting, and I like the way they often work symbolic Islamic features into new buildings. The Bay has lots of high rise buildings (say 20 stories or more), but after I get beyond that going to work, it’s usually one or two stories max.

Beyond the green of the beautiful Corniche, a walk along the bay, almost everything is beige or tan. And construction is everywhere, to repeat myself. One wonders what this would look like if it were “finished.”

Is it safe in this part of the Middle East? There has been only one terrorist incident: a suicide bombing in 2005 that killed two, including the perpetrator. You are much more likely to die in a traffic accident. There are few traffic lights and many roundabouts, though they are installing more traffic lights. They are also cracking down with fines, which they tell me are in the thousands of dollars. I’ll try not to find out how much.

I’d say the drivers are moderately aggressive, and it takes a little learning to negotiate the roundabouts, because people turn right from middle lanes, and are expected to, and you need to coordinate your expectations with theirs. BTW, gas is cheap. Three fourths of a tank of my little Chevy Optra LS cost about $7. Lots of people drive SUVs.